A Business Plan is a written document that very clearly describes the entrepreneurial idea and its effects, as well as the means, resources and methods needed to realize that idea. It provides basic information about the investor, his financial position and expected changes in the financial position of the investor after the investment and demonstrates the effectiveness of the investment through the possibility of return on investment (ROI) and earnings.
The Business Plan defines:
- the objectives and value of the investment,
- sources of funding,
- projections of future cash flows and operating results
over a period of time.
Creating a Business Plan starts with an idea. Defining a goal is at the same time a starting point for writing it as well as an end answer that must be clear to anyone who reads a business plan. A Business Plan not only serves those who start a business or upgrade an existing one, but is often the source from which outsiders evaluate the risks and cost-effectiveness of their engagement.
It is a business document that develops an entrepreneurial business idea, evaluates the business of the company in the future, describes what the company intends to do, where, how, when and with what expected business results. The Business Plan thoroughly explains the investments in the business, evaluates several business variations and their business efficiency, and assesses business risk.
Business Plans are made for both start-ups and mature companies looking to invest in a new project, business development and growth. For new companies, the business plan assesses whether the company has a business opportunity, and the data on future business is evaluated on the basis of detailed market, product and competition analysis. In the case of existing companies, the economic and financial budget contains information on the past operations and, on that basis, the development trends for new investments are estimated.
It may happen that even the best products or services don’t not see the light of day in the market, because their quality is not recognized in the written business plan. Likewise, if there is a business plan that meets all the requirements of a potential investor, then the business venture, which may not be the best, can get the funds.